Federal regulation of tobacco, higher cigarette taxes urged

Published: Saturday, May 12, 2001

NANCY ZUCKERBRODAssociated Press Writer

WASHINGTON {AP}  The federal tax on cigarettes should increase by 17 cents per pack to pay tobacco farmers to stop growing the crop and the government should have the power to regulate tobacco products, a presidential commission recommends.

The White House said President Bush would study the report, scheduled to be released Monday in tobacco-growing communities in North Carolina and Kentucky. The report also will go to Congress.

Created in September by President Clinton, the 10-member commission of farmers, health advocates and economic experts explored ways to protect the public from smoking hazards and to give tobacco growers an economic incentive to switch crops.

The 17-cent increase in the current 34-cent per pack tax would raise $3.4 billion annually for the buyout of the tobacco-quota system, based on estimated yearly cigarette sales of 20.2 billion packs, according to the report obtained by The Associated Press.

The tax rose by 10 cents per pack in 2000 and is to climb by an additional nickel per pack next year.

The commission put the cost of the buyout at about $16 billion over five years if three-quarters of tobacco farmers stop growing the crop. After five years, dollars from the higher tax should pay for tobacco-prevention, smoking cessation programs and other public health initiatives, the report recommended.

Quotas are allotments dictating how much tobacco farmers can grow. The commission proposes to replace that system with production licenses, which, unlike quotas, could not be rented out to other farmers.

Ending that practice would put tobacco production in the hands of active growers only and lower production costs for many farmers, the report said.

Tobacco farmers in recent years have experienced steep cuts in the amount of tobacco they can grow, the result of declining cigarette sales and an increased reliance on cheaper tobacco from oversees.



On the Net:

Tobacco Commission:

http://www.fsa.usda.gov/tobcom/

American Heart Association:

http://www.americanheart.org/

The commission also urged giving the Food and Drug Administration more authority over the tobacco industry. The FDA, the report said, should be able to regulate advertising that might reach teen-agers and force tobacco companies to remove harmful or addictive substances such as nicotine from cigarettes.

The FDA asserted jurisdiction over tobacco and sought to crack down on cigarette sales to minors in 1996, but the Supreme Court last year ruled the agency needed congressional approval.

Commission member M. Cass Wheeler, chief executive officer of the American Heart Association, said he hoped the recommendations would be used "as a road map for passing legislation."

White House spokesman Scott McClellan said Bush "recognizes youth smoking is a particularly serious public health issue and the president believes strongly that we should focus on cracking down on youth or teen smoking."

A spokesman for the nation's largest cigarette maker, Philip Morris Inc., declined comment, saying the company had not seen the report. The company has developed its own proposal for FDA regulation, but commission members such as Wheeler say it is too weak.

Tommy Payne, a spokesman for R.J. Reynolds Tobacco Co., said raising cigarette taxes was "a bad idea, and we would vigorously oppose it," according to the Winston-Salem (N.C.) Journal, which reported on the recommendations Saturday.

As for the tobacco buyout, tobacco farmer and commission member Jimmy Hill of Kinston, N.C., said many farmers would use the money to help them retire.

"We have been reduced to such a low level of production," he said. "We really need this buyout to allow many people to exit."

All current quota owners would get $8 per pound of tobacco they are eligible to grow. In addition, farmers who stop growing tobacco would receive $4 for every pound. Farmers who stay in the business would receive $2 a pound and would get a new production license.

The report also recommended that Congress establish an organization that could award grants and help growers become less dependent on tobacco.

Government statistics from 1997, the latest year that such data was collected, estimated there were about 90,000 tobacco farms in the United States. There were nearly 200,000 in 1978.

The states that produce the most tobacco in the United States are North Carolina, Kentucky and Tennessee.